Two giants in the security and home automation business – Alarm.com and Comcast/Xfinity – will be competing head-to-head after they each bought part of the former Icontrol, a leading SHaaS (smart home as a service) provider.
Speaking at a session during ISC West 2017 in April, Dan Herscovici, GM of Comcast’s Xfinity Home group, said the company would wholesale the service to independent alarm and home-technology installers, and that pricing would be “quite aggressive” vis-à-vis Alarm.com and other SHaaS providers.
The “economics are very good,” he said. “Better than the other players.”
Alarm.com, which serves end users through thousands of independent dealers, will go after enterprise-oriented companies such as cable companies and large service providers like ADT — stepping out of its own comfort zone and into Icontrol's.
Alarm.com inherited the ADT business with its purchase of Icontrol’s “Connect” platform, and has a five-year commitment from the security giant.
ADT, which operates on the Connect platform, was Icontrol’s biggest customer (by far). Number two was Comcast, which uses Icontrol’s Converge platform for Xfinity Home. That is the group Comcast purchased.
The cable company announced it had 957,000 subscribers at the end of Q1 2017, up a whopping 43% compared to the year-prior quarter.
Comcast will continue to deploy (and develop) that platform for its own customers, as well as former Icontrol customers (smaller cable companies mostly) and new customers, especially regional ISPs and TV service providers.
But Comcast also plans to wholesale the package to smaller, independent dealers – previously a customer base dominated by Alarm.com, Honeywell (Total Connect), and a handful of other companies in the alarm industry.
Alarm.com now has 5 million customers, after picking up more than 2 million from Icontrol (primarily from ADT). Honeywell had sued to block the acquisition on antitrust grounds, but later rescinded the lawsuit.
‘Removing Friction’ for Xfinity Home Customers
Comcast certainly has a captive audience of would-be Xfinity Home customers, with about 27 million residential customer “relationships” for Comcast’s Internet, phone and TV services. During ISC, Comcast announced a new bundling relationship for Verizon cell service under the Xfinity Mobile brand.
In Comcast’s Q1 2017 earnings call, CFO Michael J. Cavanagh said the security and automation business represents a $9 billion opportunity, “just in our footprint alone.”
Over 90% of Xfinity Home customers are subscribing to three or four services, he said, “and half of these customers are brand new to us.”
He added that Xfinity Mobile “helps consideration” when prospects shop for security.
“We remove a bunch of friction from the purchase,” Herscovici says, adding that customers “discover us when they’re shopping for Internet.”
Comcast also can reduce “friction” by the sheer breadth of its ecosystem. It has the security and home automation platform, with a growing roster if highly vetted connected devices. And then it has Internet, TV and phone services (and now cellular too).
The synergies are obvious. When you combine IoT devices with the Internet and cable box, it’s a natural step to enable users to speak commands through Comcast’s voice remote: “Xfinity, show me cameras.”
Combining all of these elements also improves tech support because if a thermostat stops working … you never quite know if it’s a problem with the Internet, the home network, the thermostat itself of the ZigBee mesh network.
All of this data can be shared with reseller partners. In addition, whatever Comcast does to improve its own service … will benefit its partners as well.
Comcast’s Better Platform
Herscovici says it can offer a platform that is better than others, not just because the products and platform are “cutting edge,” but because of its operational excellence, which it will share with customers.
“We’ll share our operational playbooks,” he told the group of security manufacturers, service providers and dealers. “We’re using the same platform we’re selling. When we want to decrease false alarms by 5 percent, everyone [partners] benefits.”
Comcast will be able to share vast market metrics with customers – something the competitors can’t do because they don’t own the own the entire ecosystem from the security to the routers to the cable boxes to the back end.
For example, on the back end, just as Comcast can remotely assess a client’s router, it can “use that same visibility all the way to the end device.”
In other words, tech-support specialists can check the health of the entire network and connected devices, whether they’re ZigBee, IP or MoCA (coax).
The Comcast “Einstein” dashboard displays at-a-glance the overall health of the account, and a separate “Watch Tower” tab provides an overall view of the neighborhood.
As we wrote in 2015, Comcast announced plans at the time to expose many of these tools to independent dealers as part of the company’s Custom Xfinity Integration (CXI) dealer program. Dealers could then determine if cable service is down in the neighborhood, if the customer’s modem is offline, if Wi-Fi signal strength is weak at certain times of the day, if the ZigBee mesh network goes offline, and more. (When asked at ISC, Herscovici said it was unlikely Comcast would offer its own tech-support to third-party resellers.)
Comcast Investment in Voice Control
Comcast will “absolutely” continue to invest in voice control, despite the emergence of third-party solutions such as Amazon Alexa, Google Home and Apple Siri. The company’s own voice-control solution, which today works via the remote control and not far-field communications, was developed as an interface for the X1 cable box, of which about 12 million are deployed.
On the other hand, Amazon has sold “only” about 5 million Echo devices.
Comcast is uniquely positioned in the voice-control realm because they own the TV interface, which offers a “great way to flatten the menu,” Herscovici says. (Echostar would have had that unique position for Dish Network, had the company not dropped its Sage product line.)
If you want to know what’s on TV, you don’t want to ask Alexa to rattle off a list.
“Voice control with a screen is powerful,” he adds.
Smarter Routers, xFi
At ISC, Herscovici had hinted about smarter routers and access points, and sure enough Comcast just announced xFi not long after the show. The product is a secure Internet gateway that enables advanced functionality such as parental controls, as well as system reporting for things like network usage per family member, usage per device, and more.
When paired with an X1 cable box, the xFi can present network information on the TV screen.
“Our routers are getting smarter,” Herscovici says. “We want to make the information more accessible.”
In general, Comcast (like its competitors) is finding it challenging to monetize home-technology services beyond physical security, and the company is “searching for services” that leverage the Comcast ecosystem and that “people are willing to pay for.
He imagines some “advanced network security” as a potential to “extract RMR [recurring monthly revenue] from customers.”
More Insights from ISC Panel
Just prior to Herscovici's fireside chat at ISC — it was just him and me up there — I moderated a panel discussion with him, along with Duane Paulson, SVP strategic development for Nortek Security & Control, and Jim McMullen, president of COPS Monitoring.
Data. Central monitoring stations and SHaaS providers like COPS and Comcast can collect rich details about their customers — important concerns like if the customers are arming their systems or frequently triggering false alarms. But potentially these companies could collect more data, for example, determining a family member spends a lot of time in the garage for targeted tool advertisements.
“I don't know where it's going to take us,” McMullen.
Security. The trio discussed security implications for their digital systems. Paulson says, while Nortek has third-party auditors for its alarm products, consumers can be their own worst enemies by sharing their passwords, for example.
False Alarms. McMullen says about 17% of monitored accounts do not arm their systems routinely, for fear of false alarms.
Attrition. It's important to get customers engaged with their systems, says Herscovici, who explains that some 75% of non-renewals are from customers who did not routinely arm their systems. Things like voice control and more targeted messaging should help. For example, customers who have frequent false alarms might receive education on how to avoid these events.
Pay as You Go Monitoring. While pay-as-you-go monitoring is finding favor among customers who don't want to commit to contracts, they're tricky to make work, according to McMullen. He wonders how a central station would staff up with such volatility in services.
“Think of July 4,” he says, “when maybe everyone turns on monitoring.”